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Top Payroll Risks and Challenges per Country

The 2017 Global Payroll Complexity Index (GPCI); from NGA Human Resources, is a business intelligence report identifying the top payroll process and compliance threats by country and region.

From a survey of UK payroll experts and professionals, results showed that: 65 percent say that managing legislative, HR and payroll updates is their number one challenge; 24 percent remain unaware of the impact of GDPR on payroll; Gender pay, Working Time Regulations & IR35 have added to reporting complexity and to the rise in payroll parameters since 2014.

Rewards and benefits factor highly in the more typical ‘white collar’ roles, with salary sacrifice and shared parental leave, taken up widely. Increased use of time and attendance (T&A) apps have simplified processing of hourly payroll; The Apprenticeship Levy, GDPR and Brexit are unknown challenges in next 12 months

Mary Holland of the Global Payroll Management Institute (GPMI) said, “The results of the Global Payroll Complexity Index confirm that multinational organisations face a myriad of demands such as managing employee data, employment and taxation compliance, data storage and privacy, salary and benefit calculations, and a wide range of work rules, and time-off benefits.

“Many of these are mandated by statutory country laws, work councils, and collective bargaining agreements. Organisations are challenged with managing risk exposure, increased government audits, standardising processes, and steering governmental changes while ensuring the integrity of their company brands”, continued Mary Holland.

Anne Clifford, Senior Director, Global Payroll Operations at NGA Human Resources, explained “Zero tolerance on payroll non-compliance and the competitive emergence of new business economies means, without a doubt, that businesses must have robust payroll systems and processes in place”

“In the countries where the 2017 Global Payroll Complexity Index reports a fall in complexity – notably the US and Canada – this is because the high-risk, high-admin payroll processes have been outsourced or automated to reduce the risk of fines and reputation damage,” concluded Anne Clifford.

Other notable observations of the 2017 Global Payroll Complexity Index:

Managing employee data: All organisations must provide payroll related information to local government departments to determine the social security and/or tax contribution of each citizen. Globally, companies must include an average of 16 data items per employee to the government in the mandated reports and declarations.

Consistent with the 2014 study, Western Europe still requires the highest number of employee data items for a net salary to be correctly calculated. Germany, France, Italy and Spain are most complex, requiring an average of 17 items. This highlights the need for highly accurate HR source data.

Managing payroll data: An average of 14 employee data items affect a net salary – little change to 2014. Italy, France and Poland top the parameter ranking for complexity, contrasting sharply with Canada and Switzerland at the bottom. Benefits and attendance have replaced tax and social security as the biggest contributors to payroll complexity.

Payroll calculation process: The majority of employers run payroll once or twice a month. Globally, North America and Oceania run the most payrolls per month, while South America and Asia run the least. In Europe, France and Italy report the most payroll runs each month.

Government reporting & declarations: On average, 16 data items per employee must be reported; a decrease from 20 in 2014. In South America and Europe the number is notably higher at 35; Italy, the Netherlands and France require the most.

Geographical influences: Each country and business type has its own cultural, regulatory factors and union agreements that affect payroll. In 60 percent of countries, employee-specific contracts influence payroll. Additionally, multi-level rules, legislations and agreements are continually adapted to comply with economic factors and changing working practices.

Language complexity: In 60 percent of countries surveyed, more than one language is spoken, adding the need for multilingual payroll. Organisations in South America are most affected. Those in Australia and New Zealand are the least affected.

Country / Regional Spotlight


Europe is the most complex payroll region in the world

7 out of the top 10 most complex countries are in Europe

France, Italy & Belgium are most complex; Luxemburg the least. Number of data fields, payroll runs, and technical and legal updates required for compliance is highest in Europe; 37 percent of respondents say that updates “keep them awake at night”. Complexity has increased since 2014 where other regions have seen simplification

North America

US complexity sits at 5.78 out of 10; one point lower than in 2014 – likely the result of high complexity processes being outsourced, not a reduction in complexity.

The country is still in the top 40 percent for complexity. Only Brazil is higher in the

Americas at 11th place

Complexity remains ‘high’ and ‘very high’ for US and Canadian payroll teams when it comes to ‘Managing Payroll Data’ and the ’Payroll Calculation Process’

67 percent highlight technical, HR and payroll updates as the greatest complexity challenge; 28 percent of enterprise organisations in North America plan to move employees into new regions (28 percent to UK, 24 percent Asia Pacific, 20 percent South America)

Zero tolerance for non-compliance is fast becoming a secondary business tax


Canada sits at 31st in complexity ranking and remains in bottom 40 percent

65 percent report managing technical and HR updates as the greatest challenge

25 percent highlight the challenge of regulatory reporting and data analytics

63 percent manage payroll in two or more jurisdictions; 16 percent manage payroll for between eight and thirteen jurisdictions


Low complexity, but one third say it’s increasing

71 percent highlight technical and HR updates as challenges, despite low numbers of payroll runs and updates – likely the result of maturing legislation and reporting requirements

86 percent pay employees in four or more countries in Africa and 43 percent do this in eight or more – resulting in highest number of languages to consider

Retro-calculations are simple and least frequent of all regions

57 percent have payroll reporting and analytics high on change agenda

38 percent plan to expand employee operations beyond African continent


Region with the lowest payroll complexity. Only Russia is in top 20

Highest rating for languages and number of people being paid in non-local currency

Malaysia has least complex payroll score according to respondents. Philippines has least complex employee data ranking; Region has lowest number of payroll runs; India and Philippines is down since 2014

South America

Higher than average complexity, with Brazil just outside top 10

No fixed tax change calendar makes it impossible to standardise concurrent runs

37 percent say regulatory reporting and data analytics are a challenge

30 percent highlight the challenge of managing technical and HR updates

Lowest number of data items required, and the fewest payroll runs

However, retro-calculations are particularly high

About the research

NGA Human Resources examined the key trends during the first quarter of 2017 and compiled a report on how payroll complexity affects the reward of employees by organisations in one of more country, ranking in terms of complexity when it comes to compensating a local and/or international workforce and how these impact corporate planning and decision making.

NGA Human Resources produced the Global Payroll Complexity Index in collaboration with:

Chartered Institute of Payroll Professionals

American Payroll Association

Global Payroll Management Institute

Canadian Payroll Association

The Association for Payroll Specialists (Australia)

South African Payroll Association

The research is based on the following five categories:

Payroll data – managing, storage and security

Payroll parameters – population groups and types

Payroll calculation – salary and rewards

Government reporting – tax and social security deductions, reporting and legislation

Geography – scope of and emerging markets

Geographical scope: 48 countries

Respondent profiles:

Subject matter experts in payroll

Local, regional and global payroll consultants and outsourcing experts and system engineers responsible for updating global payroll systems

Respondent volume: 2,874 submissions (734 fully completed)

Survey methodology: Online questionnaire and face-to-face commentary

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